Think Like a Freak

by Steven D. Levitt

If asked how we’d behave in a situation that pits a private benefit against the greater good, most of us won’t admit to favoring the private benefit. But as history clearly shows, most people, whether because of nature or nurture, generally put their own interests ahead of others’. This doesn’t make them bad people; it just makes them human.

Incentives are the cornerstone of modern life. And understanding them—or, often, deciphering them—is the key to understanding a problem, and how it might be solved. Knowing what to measure, and how to measure it, can make a complicated world less so. There is nothing like the sheer power of numbers to scrub away layers of confusion and contradiction, especially with emotional, hot-button topics. The conventional wisdom is often wrong. And a blithe acceptance of it can lead to sloppy, wasteful, or even dangerous outcomes. Correlation does not equal causality. When two things travel together, it is tempting to assume that one causes the other. Married people, for instance, are demonstrably happier than single people; does this mean that marriage causes happiness? Not necessarily. The data suggest that happy people are more likely to get married in the first place. As one researcher memorably put it, “If you’re grumpy, who the hell wants to marry you?”

A growing body of research suggests that even the smartest people tend to seek out evidence that confirms what they already think, rather than new information that would give them a more robust view of reality.

This made our ears prick up. One thing we’ve learned is that when people, especially politicians, start making decisions based on a reading of their moral compass, facts tend to be among the first casualties. We asked the minister what he meant by “moral obligation.”

Those questions were unanswerable—there simply wasn’t enough information given in the story. And yet a whopping 76 percent of the children answered these questions either yes or no.

When asked to name the attributes of someone who is particularly bad at predicting, Tetlock needed just one word. “Dogmatism,” he says. That is, an unshakable belief they know something to be true even when they don’t. Tetlock and other scholars who have tracked prominent pundits find that they tend to be “massively overconfident,” in Tetlock’s words, even when their predictions prove stone-cold wrong. That is a lethal combination—cocky plus wrong—especially when a more prudent option exists: simply admit that the future is far less knowable than you think.

There is one more explanation for why so many of us think we know more than we do. It has to do with something we all carry with us everywhere we go, even though we may not consciously think about it: a moral compass.

Has all this study led Lester to some grand unified theory of suicide? Hardly. So far he has one compelling notion. It’s what might be called the “no one left to blame” theory of suicide. While one might expect that suicide is highest among people whose lives are the hardest, research by Lester and others suggests the opposite: suicide is more common among people with a higher quality of life.

We don’t even know what share of suicide victims are mentally ill. There is so much disagreement on this issue, Lester says, that estimates range from 5 percent to 94 percent

But a mountain of recent evidence suggests that teacher skill has less influence on a student’s performance than a completely different set of factors: namely, how much kids have learned from their parents, how hard they work at home, and whether the parents have instilled an appetite for education.

In Freakonomics, we identified one missing factor: the legalization of abortion in the early 1970s. The theory was jarring but simple. A rise in abortion meant that fewer unwanted children were being born, which meant fewer children growing up in the sort of difficult circumstances that increase the likelihood of criminality.

Simply this: too many children were being brought up in bad environments that led them to crime. As the first post-abortion generation came of age, it included fewer children who’d been raised in such environments.

Luther’s bold move launched the Protestant Reformation. Germany at the time was made up of more than one thousand independent territories, each ruled by its own prince or duke. Some of these men followed Luther and embraced Protestantism; others stayed loyal to the Church. This schism would play out for decades all over Europe, often with immense bloodshed. In 1555, a temporary settlement was reached, the Peace of Augsburg, which allowed each German prince to freely select the religion to be practiced in his territory. Moreover, if a Catholic family lived in a territory whose prince chose Protestantism, the Peace allowed them to freely migrate to a Catholic area, and vice versa.

Perhaps this isn’t so surprising. Germany, after all, is a nation steeped in tradition. But Spenkuch, while playing around with those maps, found something that did surprise him. The religious patchwork of modern Germany also overlapped with an interesting economic patchwork: the people living in Protestant areas earned more money than those in Catholic areas. Not a great deal more—about 1 percent—but the difference was clear. If the prince in your area had sided with the Catholics, you were likely to be poorer today than if he had followed Martin Luther.

He identified three factors: Protestants tend to work a few more hours per week than Catholics. Protestants are more likely than Catholics to be self-employed. Protestant women are more likely than Catholic women to work full-time. It appears that Jörg Spenkuch found living proof of the Protestant work ethic. That was the theory put forth in the early 1900s by the German sociologist Max Weber, which argued that capitalism took off in Europe in part because Protestants embraced the earthly notion of hard work as part of their divine mission.

Why, for instance, are some Italian towns more likely than others to participate in civic and philanthropic programs? Because, as some researchers argue, during the Middle Ages these towns were free city-states rather than areas ruled by Norman overlords. Such an independent history apparently fosters a lasting trust in civic institutions.

It took years for the ulcer proof to fully take hold, for conventional wisdom dies hard. Even today, many people still believe that ulcers are caused by stress or spicy foods. Fortunately, doctors now know better. The medical community finally came to acknowledge that while everyone else was simply treating the symptoms of an ulcer, Barry Marshall and Robin Warren had uncovered its root cause. In 2005, they were awarded the Nobel Prize.

(One trick that works for us is a cooling-off period. Ideas nearly always seem brilliant when they’re hatched, so we never act on a new idea for at least twenty-four hours. It is remarkable how stinky some ideas become after just one day in the sun.)

To think like a Freak means to think small, not big. Why? For starters, every big problem has been thought about endlessly by people much smarter than we are. The fact that it remains a problem means it is too damned hard to be cracked in full. Such problems are intractable, hopelessly complex, brimming with entrenched and misaligned incentives. Sure, there are some truly brilliant people out there and they probably should think big. For the rest of us, thinking big means you’ll spend a lot of time tilting at windmills.

But as we noted earlier, the raw material in the education system—the students themselves—are often overlooked. Might there be some small, simple, cheap intervention that could help millions of students?

What do the numbers say? Nothing more than this: within ten years, the United States went from very few abortions to roughly 1.6 million a year, largely because of Roe v. Wade, the Supreme Court decision that made abortion legal in all fifty states.

You may have noticed a common thread in some of the stories we’ve told—about solving ulcers, eating hot dogs, and blind-tasting wine: the people involved seem to be having a good time as they learn. Freaks like to have fun. This is another good reason to think like a child.

There has been a recent surge in research into “expert performance,” hoping to determine what makes people good at what they do. The single-most compelling finding? Raw talent is overrated: people who achieve excellence—whether at golf or surgery or piano-playing—were often not the most talented at a young age, but became expert by endlessly practicing their skills. Is it possible to endlessly practice something you don’t enjoy? Perhaps, although neither one of us is capable of it.

But what if the fun part of playing the lottery could somehow be harnessed to help people save money? That is the idea behind a prize-linked savings (PLS) account. Here’s how it works. Rather than spend $100 on lottery tickets, you deposit $100 in a bank account. Let’s say the going interest rate is 1 percent. In a PLS account, you agree to surrender a small chunk of that interest, perhaps .25 percent, which then gets pooled with all the other small chunks from fellow PLS depositors. What happens to that pool of money? It is periodically paid out in a lump sum to some randomly chosen winner—just like the lottery!

Not that incentives are always so easy to figure out. Different types of incentives—financial, social, moral, legal, and others—push people’s buttons in different directions, in different magnitudes. An incentive that works beautifully in one setting may backfire in another. But if you want to think like a Freak, you must learn to be a master of incentives—the good, the bad, and the ugly.

Not even close. The clear winner of the four was “Join Your Neighbors.” That’s right: the herd-mentality incentive beat out the moral, social, and financial incentives. Does this surprise you? If so, maybe it shouldn’t. Look around the world and you’ll find overwhelming evidence of the herd mentality at work. It influences virtually every aspect of our behavior—what we buy, where we eat, how we vote.

This is one of those obvious questions that most smart people might not think to ask. Mullaney became consumed by it. A raft of academic research pointed to two main reasons: People are truly altruistic, driven by a desire to help others. Giving to charity makes them feel better about themselves; economists call this “warm-glow altruism.” Mullaney didn’t doubt these two factors. But he thought there was a third factor, which people didn’t talk about: Once people are asked to donate, the social pressure is so great that they get bullied into giving, even though they wish they’d never been asked in the first place. Mullaney knew that number 3 was important to Smile Train’s success.

There is one more factor that made once-and-done successful, a factor so important—subtle and powerful at the same time—that we believe it is the secret ingredient to make any incentive work, or at least work better. The most radical accomplishment of once-and-done is that it changed the frame of the relationship between the charity and the donor.

And so it was that David Lee Roth and King Solomon both engaged in a fruitful bit of game theory—which, narrowly defined, is the art of beating your opponent by anticipating his next move.

In the retail trade, for instance, employee turnover is roughly 50 percent annually; among fast-food workers, the rate can approach 100 percent.

“[W]e can be blind to the obvious, and we are also blind to our blindness.” Few of us are immune to this blind spot. That goes for you, and that goes for the two of us as well. And so, as the basketball legend-cum-philosopher Kareem Abdul-Jabbar once put it, “It’s easier to jump out of a plane—hopefully with a parachute—than it is to change your mind about an opinion.” Okay, so how can you build an argument that might actually change a few minds?

And since roughly 90 percent of the world’s 1.2 million traffic deaths each year—yes, 1.2 million deaths, every year!—are the result of driver error, the driverless car may be one of the biggest lifesavers in recent history.

But let’s consider a different set of parents: the ones whose children are currently dying in traffic accidents. Around the world, some 180,000 kids are killed each year, or roughly 500 a day. In wealthy countries, this is easily the leading cause of death for kids from ages five to fourteen, outpacing the next four causes—leukemia, drowning, violence, and self-inflicted injuries—combined

There are at least two problems with this story: (1) an ever-growing body of evidence suggests that eating fat is pretty good for us, at least certain types of fat and in moderation; and (2) when people stopped eating fat, it wasn’t as if they instead ate nothing; they began to consume more sugar and more carbohydrates that the body turns into sugar—and which, the evidence suggests, is a huge contributor to obesity.